International credit watcher Moody’s Investors Services adjusted downward its growth forecast for the Philippines this year due largely to the delay in the passage of the budget.
In a recent report, Moody’s said the Philippines is now expected to grow by only 5.8 percent for 2019. This is lower than its earlier forecast of 6 percent and below the government’s target range of 6 percent to 7 percent for the year.
Moody’s said it slashed its growth outlook for the Philippines this year due to the delay in the approval of the 2019 national budget and the disruption this caused to the country’s infrastructure build-out.
Aside from the Philippines, the credit watcher also slashed its growth forecast for Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Mongolia, New Zealand, Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam.
Of the 16, Moody’s said Hong Kong and Singapore have shown particularly weak expansions this year, with very large deteriorations in real GDP growth when compared to the first half of 2018.
Moody’s said externally-oriented economies saw a sharper slowdown during the first six months of 2019, while domestic factors have had a greater influence on growth in Japan, India and the Philippines.
The credit watcher also said the weaker global economy has stunted Asian exports and the uncertain operating environment has weighed on investment.
“In particular, softer capital formation has mirrored the weakening in exports, especially for trade-reliant economies such as Korea and Hong Kong,” Moody’s said.
The slower overall GDP growth in the region, however, has not yet weighed significantly on broader employment conditions, while generally benign inflation supports purchasing power across Asia Pacific, according to the international credit watcher.
GDP growth in the first half proved to be lackluster as it averaged 5.6 percent, lower than the government’s target. The government and most local analysts blamed this on the government’s inability to pass a budget on time.
Although Economic managers such as Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier said the government target is still “achievable”, Philippine economy should expand by at least 6.5 percent on average in the second half of the year to hit the low end of the government’s target.
Based on Moody’s forecast, the international credit watcher expects Philippine GDP growth to average 6.1 percent in the second half of 2019.
Via | Bianca Cuaresma